Zuniga, Inc. uses a process costing system. During May, 1,200 units were transferred into Department 2 at a cost of $38,040. Direct materials are added at the beginning of the process. Additionally:
On May 1: Beginning inventories = 250 units, 40% complete
Direct materials costs = $1,250
Conversion costs = $1,356
Transferred-in costs = $2,560
During May: Direct materials costs incurred = $6,000
Conversion costs incurred = $17,013
On May 31: Ending Inventories = 350 units, 20% complete
Using the FIFO method, the equivalent units of material were:

Question

Quizplus · Accepted Answer

Under the FIFO method, equivalent units for materials are calculated by considering only the work done during the current period. Since direct materials are added at the beginning of the process, all units started and completed during May, as well as the ending inventory, are considered 100% complete for materials. Therefore, the equivalent units for materials are the units started and completed (1,200 - 250) plus the ending inventory (350), totaling 1,200 equivalent units.